QFA LIFE ASSURANCE SAMPLE PAPER
1 QUESTIONS WITH ACTUAL
SOLUTIONS
A ssneed ssto ssaccumulate ssa sscapital sssum ssfrom ssregular sssurplus ssincome ssover ssa
ssperiod ssof sstime ssis sswhich sstype ssof sspersonal ssfinancial ssneed?
A ssSavings
B ssInvestment
C ssProtection
D ssLoan ss- ssAnswer ssA ss
1.1 ss- ssMain sstypes ssof sspersonal ssfinancial ssneeds
The ssprimary ssfinancial ssneed ssof ssa ssclient ssin sstheir ss60s ssis sslikely ssto ssbe:
A sssavings
B ssinvestment
C ssprotection
D ssloans ss- ssAnswer ssB
1.3 ss- ssLife ssCycle
Factfinding ssis ssalso ssknown ssas:
A sssuitability
B ssknow ssthe ssclient
C ssappropriateness
D sstreating ssthe ssclient ssfairly ss- ssAnswer ssB ss
1.5 ss- ssBenefits ssof ssfinancial ssplanning
If ssJackie sswants ssto ssmaintain ssthe ssreal sspurchasing sspower ssof ssher sslife sscover
ssshe ssshould ssadd sswhich ssoption ssto ssthe ssTerm ssAssurance sspolicy ssshe ssis
sstaking ssout?
,A ssInsurability
B ssConversion
C ssIndexation
D ssRenewal ss- ssAnswer ssC ss
2.4 ss- ssAncillary/Optional ssbenefits
The ssMAIN ssreason sswhy ssthe sspremium ssunder ssa ssTerm ssAssurance sspolicy,
sswhich sscontains ssautomatic ssindexation ssof sscover ssand sspremium, ssincreases ssat
ssa ssfaster ssrate ssthan ssthe ssincrease ssin sscover ssis ssbecause:
A sscommission ssis sspayable sson sseach ssincrease ssin sspremium
B ssthe sscost ssof sslife ssassurance sscover ssincreases sswith ssage
C ssstamp ssduty ssis sspayable sson ssthe ssincrease ssin sscover
D ssthe sslife sscompany ssimposes ssan ssincreased ssadministration sscharge ss- ssAnswer
ssB ss
2.4 ss- ssAncillary/Optional ssbenefits
The sscost ssof sslife ssassurance sspolicy sswill ssbe sscheaper ssif:
(i) ssthe sslife ssassured ssis ssfemale
(ii) ssthe sslife ssassured sshas ssexisting sscover ssin ssplace sswith ssthe sslife sscompany
(iii) ssindexation ssis ssnot ssadded ssas ssan ssancillary ssbenefit.
A ss(i) ssonly
B ss(i) ssand ss(ii) ssonly
C ss(ii) ssand ss(iii) ssonly
D ss(iii) ssonly ss- ssAnswer ssD
2.2.1 ss- ssTerm ssAssurance
John ssand ssMaria sshave ssa ssdual sslife ssTerm ssAssurance sspolicy sscovering ssJohn
ssfor ss€100,000 ssand ssMaria ssfor ss€125,000 sslife ssassurance sscover.
If ssthey ssboth ssdie sstogether ssin ssa sscar sscrash, sswhat ssTOTAL ssamount sswill ssbe
sspaid ssout sson ssthe sspolicy?
A ss€25,000
B ss€100,000
C ss€125,000
D ss€225,000 ss- ssAnswer ssD ss
2.2.1 ss- ssTerm ssAssurance
Which ssone ssof ssthe ssfollowing ssstatements ssregarding ssthe ssexercise ssof ssa
ssconversion ssoption sson ssa ssConvertible ssTerm ssAssurance ss(CTA) ssis ssCORRECT?
, A ssThe sspremium sson ssthe ssnew sspolicy sscannot ssbe ssmore ssthan ssthe sspremium
sson ssthe ssoriginal ssCTA sspolicy
B ssThe ssoption sscan ssbe ssexercised, sseven ssif ssthe sslife ssassured ssis ssthen ssin ssbad
sshealth
C ssThe ssoption sscan ssbe ssexercised ssonly sswithin ssthree ssmonths ssafter ssthe ssCTA
sspolicy ssends
D ssOnly ssa ssportion ssof ssthe sscover sson ssthe ssCTA sspolicy sscan ssbe sstransferred ssto
ssthe ssnew sspolicy ss- ssAnswer ssB
2.2.2 ss- ssConvertible ssTerm ssAssurance ss(CTA)
Which ssone ssof ssthe ssfollowing ssfeatures ssCAN ssapply ssto ssa ssPension ssTerm
ssAssurance sspolicy?
A ssLower ssrates ssfor ssnon-smokers
B ssOptional ssserious ssillness sscover
C ssJoint sslife ssassurance sscover
D ssA sscash ssreturn sson ssearly sstermination ss- ssAnswer ssA ss
2.2.3 ss- ssPension ssTerm ssAssurance
The ssdeath ssbenefits sspaid ssout ssby ssa ssregular ssincome ssbenefit sspolicy ssare
sstreated ssin ssthe sshands ssof ssthe ssdeceased's ssdependants ssfor sstax sspurposes ssas:
A ssincome, ssliable ssto ssincome sstax
B sscapital ssinstalments ssof ssthe sssum ssassured
cover
C ssinvestment ssgains, ssliable ssto sscapital ssgains sstax
D ssinvestment ssgains, ssliable ssto ssexit sstax ss- ssAnswer ssB
2.2.4 ss- ssRegular ssIncome ssBenefit
The sspremium ssfor ssmortgage ssprotection sspolicy ssA, ssassuming ssa ssmortgage
ssinterest ssrate ssof ss8% ssper ssannum, ssis sshigher ssthan ssthe sspremium ssfor sspolicy ssB
sswhich ssassumes ssa ssmortgage ssinterest ssrate ssof ss6% ssper ssannum. ssThe sssame
ssmortgage, ssterm ssand sslife ssassured ssis ssassumed ssin ssboth sspolicies.
The sspremium ssfor sspolicy ssA ssis sshigher ssthan ssthat ssfor sspolicy ssB ssbecause:
A ssmortgage ssinterest ssrates sscould ssrise ssfrom sstheir sscurrent sslevels.
B sspolicy ssA ssprovides sshigher sscover ssover ssthe sspolicy ssterm ssthan sspolicy ssB.
C ssmortgage ssinterest ssrates sscould ssfall ssfrom sstheir sscurrent sslevels.
D sspolicy ssA ssprovides sslower sscover ssover ssthe sspolicy ssterm ssthan sspolicy ssB ss-
ssAnswer ssB ss
2.2.5 ss- ssMortgage ssProtection
1 QUESTIONS WITH ACTUAL
SOLUTIONS
A ssneed ssto ssaccumulate ssa sscapital sssum ssfrom ssregular sssurplus ssincome ssover ssa
ssperiod ssof sstime ssis sswhich sstype ssof sspersonal ssfinancial ssneed?
A ssSavings
B ssInvestment
C ssProtection
D ssLoan ss- ssAnswer ssA ss
1.1 ss- ssMain sstypes ssof sspersonal ssfinancial ssneeds
The ssprimary ssfinancial ssneed ssof ssa ssclient ssin sstheir ss60s ssis sslikely ssto ssbe:
A sssavings
B ssinvestment
C ssprotection
D ssloans ss- ssAnswer ssB
1.3 ss- ssLife ssCycle
Factfinding ssis ssalso ssknown ssas:
A sssuitability
B ssknow ssthe ssclient
C ssappropriateness
D sstreating ssthe ssclient ssfairly ss- ssAnswer ssB ss
1.5 ss- ssBenefits ssof ssfinancial ssplanning
If ssJackie sswants ssto ssmaintain ssthe ssreal sspurchasing sspower ssof ssher sslife sscover
ssshe ssshould ssadd sswhich ssoption ssto ssthe ssTerm ssAssurance sspolicy ssshe ssis
sstaking ssout?
,A ssInsurability
B ssConversion
C ssIndexation
D ssRenewal ss- ssAnswer ssC ss
2.4 ss- ssAncillary/Optional ssbenefits
The ssMAIN ssreason sswhy ssthe sspremium ssunder ssa ssTerm ssAssurance sspolicy,
sswhich sscontains ssautomatic ssindexation ssof sscover ssand sspremium, ssincreases ssat
ssa ssfaster ssrate ssthan ssthe ssincrease ssin sscover ssis ssbecause:
A sscommission ssis sspayable sson sseach ssincrease ssin sspremium
B ssthe sscost ssof sslife ssassurance sscover ssincreases sswith ssage
C ssstamp ssduty ssis sspayable sson ssthe ssincrease ssin sscover
D ssthe sslife sscompany ssimposes ssan ssincreased ssadministration sscharge ss- ssAnswer
ssB ss
2.4 ss- ssAncillary/Optional ssbenefits
The sscost ssof sslife ssassurance sspolicy sswill ssbe sscheaper ssif:
(i) ssthe sslife ssassured ssis ssfemale
(ii) ssthe sslife ssassured sshas ssexisting sscover ssin ssplace sswith ssthe sslife sscompany
(iii) ssindexation ssis ssnot ssadded ssas ssan ssancillary ssbenefit.
A ss(i) ssonly
B ss(i) ssand ss(ii) ssonly
C ss(ii) ssand ss(iii) ssonly
D ss(iii) ssonly ss- ssAnswer ssD
2.2.1 ss- ssTerm ssAssurance
John ssand ssMaria sshave ssa ssdual sslife ssTerm ssAssurance sspolicy sscovering ssJohn
ssfor ss€100,000 ssand ssMaria ssfor ss€125,000 sslife ssassurance sscover.
If ssthey ssboth ssdie sstogether ssin ssa sscar sscrash, sswhat ssTOTAL ssamount sswill ssbe
sspaid ssout sson ssthe sspolicy?
A ss€25,000
B ss€100,000
C ss€125,000
D ss€225,000 ss- ssAnswer ssD ss
2.2.1 ss- ssTerm ssAssurance
Which ssone ssof ssthe ssfollowing ssstatements ssregarding ssthe ssexercise ssof ssa
ssconversion ssoption sson ssa ssConvertible ssTerm ssAssurance ss(CTA) ssis ssCORRECT?
, A ssThe sspremium sson ssthe ssnew sspolicy sscannot ssbe ssmore ssthan ssthe sspremium
sson ssthe ssoriginal ssCTA sspolicy
B ssThe ssoption sscan ssbe ssexercised, sseven ssif ssthe sslife ssassured ssis ssthen ssin ssbad
sshealth
C ssThe ssoption sscan ssbe ssexercised ssonly sswithin ssthree ssmonths ssafter ssthe ssCTA
sspolicy ssends
D ssOnly ssa ssportion ssof ssthe sscover sson ssthe ssCTA sspolicy sscan ssbe sstransferred ssto
ssthe ssnew sspolicy ss- ssAnswer ssB
2.2.2 ss- ssConvertible ssTerm ssAssurance ss(CTA)
Which ssone ssof ssthe ssfollowing ssfeatures ssCAN ssapply ssto ssa ssPension ssTerm
ssAssurance sspolicy?
A ssLower ssrates ssfor ssnon-smokers
B ssOptional ssserious ssillness sscover
C ssJoint sslife ssassurance sscover
D ssA sscash ssreturn sson ssearly sstermination ss- ssAnswer ssA ss
2.2.3 ss- ssPension ssTerm ssAssurance
The ssdeath ssbenefits sspaid ssout ssby ssa ssregular ssincome ssbenefit sspolicy ssare
sstreated ssin ssthe sshands ssof ssthe ssdeceased's ssdependants ssfor sstax sspurposes ssas:
A ssincome, ssliable ssto ssincome sstax
B sscapital ssinstalments ssof ssthe sssum ssassured
cover
C ssinvestment ssgains, ssliable ssto sscapital ssgains sstax
D ssinvestment ssgains, ssliable ssto ssexit sstax ss- ssAnswer ssB
2.2.4 ss- ssRegular ssIncome ssBenefit
The sspremium ssfor ssmortgage ssprotection sspolicy ssA, ssassuming ssa ssmortgage
ssinterest ssrate ssof ss8% ssper ssannum, ssis sshigher ssthan ssthe sspremium ssfor sspolicy ssB
sswhich ssassumes ssa ssmortgage ssinterest ssrate ssof ss6% ssper ssannum. ssThe sssame
ssmortgage, ssterm ssand sslife ssassured ssis ssassumed ssin ssboth sspolicies.
The sspremium ssfor sspolicy ssA ssis sshigher ssthan ssthat ssfor sspolicy ssB ssbecause:
A ssmortgage ssinterest ssrates sscould ssrise ssfrom sstheir sscurrent sslevels.
B sspolicy ssA ssprovides sshigher sscover ssover ssthe sspolicy ssterm ssthan sspolicy ssB.
C ssmortgage ssinterest ssrates sscould ssfall ssfrom sstheir sscurrent sslevels.
D sspolicy ssA ssprovides sslower sscover ssover ssthe sspolicy ssterm ssthan sspolicy ssB ss-
ssAnswer ssB ss
2.2.5 ss- ssMortgage ssProtection
